COMPANY NEWS

COMPANY NEWS; Electro-Entrepreneurs Compete for Consumers

By ADAM BRYANT,

Published: May 29, 1992

CHICAGO, May 28—
Jackie Tompkins says she knows how to invigorate the consumer electronics industry.

Her secret weapon, in development for two years, is Collecto-Vid, a bookshelf of numbered, colored boxes designed to clean up videotape clutter. An index book, with a sleeve to hold a TV Guide, "makes instant access easy as punch," she said. "We're going to energize tape sales."

Ms. Tompkins is just one of many exhibitors at the summer Consumer Electronics Show, which opened here today, who are pitching items they hope will turn out to be what the industry needs: another hit product with the must-have status enjoyed by compact disk players and videocassette recorders. The industry's growth dipped into single digits last year, and fierce price wars are grinding down profit margins. The Competiton Is Tough

Ms. Tompkins faces competition from other start-up entrepreneurs, like the makers of the Tele-Fire, an opaque screen placed in front of a television that creates a "parade of visual surprises in kaleidoscopic colors" when a program is played behind it.

But many of the more likely winners in the race to find the next Walkman also displayed their wares today in the cavernous, cacophonous McCormick Place.

Philips demonstrated more software programs for its fledgling interactive compact disk system, known as CD-I. The $800 system can play audio compact disks, video games showing real actors instead of animated characters, and videos with high-quality sound. Philips hopes it will ultimately replace the staples of many current home entertainment systems.

Sony and Matsushita plan to introduce similar systems in the fall in Japan but for now are leaving Philips alone to try to build demand. Because demand for the machine will grow out of interest in software programs, Philips executives said today that the company was producing 194 programs and would issue 100 before the end of the year. The interactive software ranges from tours of museums to children's educational programs.

Martin Brochstein, a senior editor of Television Digest, an industry newsletter, said that while the product demonstration was impressive, Philips would need the help of others to spread its CD-I message. "One company cannot make a standard," he said.

But Philips is getting some indirect help from the Eastman Kodak Company, which has developed a Photo CD system that is compatible with the Philips CD-I machine. With Kodak's system, picture takers can transfer negatives and slides to a compact disk, which can then be displayed on a television screen with the right equipment. Digital Compact Cassettes

The application of digital technology has created other noteworthy developments that drew large crowds here. Many people lined up to hear the new digital compact cassettes under development by Philips. The digital cassettes will compete with the recordable compact disk being developed by Sony. Both systems represent potential growth products, because they enable listeners to record in a high-quality digital format.

Earlier this week, Philips announced roughly 150 musical artists whose work will be released in the digital cassette format, hoping that the music will drive demand for the hardware.

Two video game makers, Sega of America and Nintendo, also plan to compete with compact digital technology.

One of the more difficult selling jobs facing exhibitors at the show belongs to Janis Birznieks, general manager of Baltek Inc. of San Francisco.

Baltek recently won the exclusive contract to distribute loudspeakers made in Latvia.

Mr. Birznieks concedes that it may be difficult to convince American consumers about the quality of products made in a former Soviet republic. Indeed, its print advertisement asks in bold letters, "Loudspeakers from where?" One of his marketing strategies is to appeal directly to the 100,000 people of Latvian descent living in the United States, so he is advertising in specialized journals and ethnic newspapers.

The company got off to a rough start. Its first shipment of 2,000 speakers was delayed by more than a week, partly because American customs officers had to rewrite their computer software to include Latvia. Mr. Birznieks says he is confident that all 12,000 pairs that were shipped to the United States will be sold this year. "There are always buyers out there," he said. "We'll sell them. It's just a matter of price."